VIX challenged its Intermediate-term resistance at 10.22 but did not break above it, closing near an 88.6% retracement  A breakout above the Ending Diagonal trendline suggests a complete retracement of the decline from January 2016, and possibly to August 2015. The December target may be the Cycle Top at 23.11.

(ZeroHedge)  While the fear-tracking VIX has been languishing near record lows this year, a gauge of so-called ambiguity, meant to chronicle the degree of uncertainty investors have in the probabilities they use to make decisions, has been at all-time highs in recent months, indicating that there’s more fear built into the stock market than common measures of volatility suggest.

SPX throws over its Cycle Top support/resistance

SPX threw-over its double trendlines and weekly Cycle Top support at 2649.45, closing above them for the week.  The Cycles Model proposes a pullback next week.  Should it break Intermediate-term support and the trendline at 2557.80, the decline may be severe.  

(ZeroHedge)  There is a fascinating table in JPMorgan’s 2018 year-end outlook released overnight, previewed yesterday by head quant Marko Kolanovic: it shows that a funny thing happened as the so-called experts were looking for signs of retail euphoria (and repeatedly were unable to find it): everyone went “all-in” stocks, and not just retail investors and US households, but mutual funds, hedge funds, pensions, systematic, and sovereign wealth funds.

As JPMorgan calculated first one month ago when looking at the equity positioning of the main investor types, “allocations are near historical highs, not leaving much room for further increases.”

NDX throws over Cycle Top resistance

NDX rallied above its Cycle Top at 6411.78 this week to make a new all-time high.  A decline beneath the lower Diagonal trendline at 6180.00 and Intermediate-term support may produce a sell signal.    

(ABCNews)  After driving the overall domestic market to dozens of new highs this year, the tech sector is poised for another stellar year in 2018.

Led by Amazon, Apple, Alphabet (Google), Netflix and Facebook, tech will probably remain the energizer bunny of market sectors.

The sector’s performance runs much broader and deeper than these household names. For example, in the third quarter, 90 percent of tech companies reported better-than-expected earnings and 84 percent beat revenue estimates.

High Yield Bond Index surges higher

The High Yield Bond Index made a new high on Monday, then declined through Wednesday, closing the week at a nominal new high. A break of the Cycle Top at 188.46 may tell us the rally is over.  A sell signal may be generated with a decline beneath the lower Diagonal trendline at 179.00.

(Morningstar)  Despite a few hiccups along the way, high-yield bond funds have been on an impressive run since the 2008 financial crisis. From April 2009 through November 2017, the median high-yield bond fund returned 10.9% annualized. By comparison, the Bloomberg Barclays U.S. Aggregate Bond Index (often used as a proxy for a core investment-grade fixed-income allocation) only returned 4.0% annualized over the same period.

USB broke above its consolidation

The Long Bond broke above Intermediate-term resistance at 153.47 and its consolidation zone. The Cycles Model suggests a potential rallythrough the end of the month that may be quite strong.    

(ZeroHedge)  Before you shut down that terminal for the year, hoping that the year is – mercifully – finally over, you may want to consider that according to former Lehman trader and current Bloomberg macro commentator Mark Cudmore, the Christmas pain trade is about to be unveiled, and it will be especially painful for all those short Treasurys. As Cudmore warns, with ten-years stuck in a 2.3%-2.43% range for the past seven weeks, “the arguments are adding up for a violent downside break during the weeks ahead.”